US takes steps to clear Myanmar company blacklist

The US has been telling Myanmar companies it once designated as cronies of Myanmar’s former military junta that now may be the time to get off the trade blacklist. The effort highlights just how much of Myanmar’s economy remains under sanctions and the challenge for companies seeking to wade into the new terrain.

State Department officials met with blacklisted businessmen in Yangon at the end of June to encourage them to apply to have their names cleared, if they were prepared to show their commitment to Myanmar’s democratic transition, officials said. To be granted the delisting, companies would need to demonstrate that they are taking steps to sever their ties to Myanmar’s military and prove they are not committing human rights abuses.

“We wanted to make it clear, if they are prepared to take these steps, there is a path forward,” a State Department official said.

The effort is part of a broader outreach to the business community in Myanmar that will include a visit next month by the State Department’s assistant secretary of economic and business affairs Charles H. Rivkin to meet US companies in Yangon.

The outreach highlights the challenge for companies seeking fresh opportunities that opened in Myanmar after the US began lifting a near total ban on new business in the country in 2012. Companies such as Coca-Cola Co.and Western Union have already made investments in the country.

But despite the sanctions easing, many of the potential partners in the country remain on the US blacklist, known as Specially Designated Nationals (SDN), making any deals a huge compliance challenge. There are currently around 120 Myanmar companies and individuals on the blacklist, according to US Treasury records. The US Treasury Department blacklists Myanmar companies because of alleged ties to the generals who ruled the country until 2011, when a civilian government was established.

But decades of military rule mean much of the economy is still controlled by companies with deep military ties, experts say.

“Most of the big economic players in the country are still designated,” said Erich Ferrari, an attorney who specialises in sanctions.

That issue was demonstrated in a separate US visit to Myanmar by Secretary of State John Kerry last week, when his delegation stayed in a hotel owned by a businessman on the blacklist, the Wall Street Journal reported. The State Department’s stay was organised by Myanmar’s foreign government, and a hotel stay doesn’t violate US sanctions. But the situation illustrated the challenge of doing business in a country still under sanction.

“Japanese and Chinese companies have been emboldened to go in and make deals,” Ferrari said. “But US companies worry that any deal is going to touch on an SDN.”

Myanmar companies that do apply for delisting from the US Department of Treasury will likely have to wait for years, said Ferrari, who represents firms seeking to get off the blacklist.

And for companies probing business deals in Myanmar, it’s unclear whether the current easing of sanctions will last. The US is already coming under criticism from human rights groups and some lawmakers who allege that Myanmar’s military continues to commit atrocities, and is blocking opposition leader of Aung San Suu Kyi from running for presidency.

“The SDN list is being used as an undeserved carrot for [Myanmar’s military] and its cronies on the SDN list,” said Simon Billenness, interim executive director of “US Campaign for Burma”.

The US has been telling Myanmar companies it once designated as cronies of Myanmar’s former military junta that now may be the time to get off the trade blacklist. The effort highlights just how much of Myanmar’s economy remains under sanctions and the challenge for companies seeking to wade into the new terrain.

State Department officials met with blacklisted businessmen in Yangon at the end of June to encourage them to apply to have their names cleared, if they were prepared to show their commitment to Myanmar’s democratic transition, officials said. To be granted the delisting, companies would need to demonstrate that they are taking steps to sever their ties to Myanmar’s military and prove they are not committing human rights abuses.

“We wanted to make it clear, if they are prepared to take these steps, there is a path forward,” a State Department official said.

The effort is part of a broader outreach to the business community in Myanmar that will include a visit next month by the State Department’s assistant secretary of economic and business affairs Charles H. Rivkin to meet US companies in Yangon.

The outreach highlights the challenge for companies seeking fresh opportunities that opened in Myanmar after the US began lifting a near total ban on new business in the country in 2012. Companies such as Coca-Cola Co.and Western Union have already made investments in the country.

But despite the sanctions easing, many of the potential partners in the country remain on the US blacklist, known as Specially Designated Nationals (SDN), making any deals a huge compliance challenge. There are currently around 120 Myanmar companies and individuals on the blacklist, according to US Treasury records. The US Treasury Department blacklists Myanmar companies because of alleged ties to the generals who ruled the country until 2011, when a civilian government was established.

But decades of military rule mean much of the economy is still controlled by companies with deep military ties, experts say.

“Most of the big economic players in the country are still designated,” said Erich Ferrari, an attorney who specialises in sanctions.

That issue was demonstrated in a separate US visit to Myanmar by Secretary of State John Kerry last week, when his delegation stayed in a hotel owned by a businessman on the blacklist, the Wall Street Journal reported. The State Department’s stay was organised by Myanmar’s foreign government, and a hotel stay doesn’t violate US sanctions. But the situation illustrated the challenge of doing business in a country still under sanction.

“Japanese and Chinese companies have been emboldened to go in and make deals,” Ferrari said. “But US companies worry that any deal is going to touch on an SDN.”

Myanmar companies that do apply for delisting from the US Department of Treasury will likely have to wait for years, said Ferrari, who represents firms seeking to get off the blacklist.

And for companies probing business deals in Myanmar, it’s unclear whether the current easing of sanctions will last. The US is already coming under criticism from human rights groups and some lawmakers who allege that Myanmar’s military continues to commit atrocities, and is blocking opposition leader of Aung San Suu Kyi from running for presidency.

“The SDN list is being used as an undeserved carrot for [Myanmar’s military] and its cronies on the SDN list,” said Simon Billenness, interim executive director of “US Campaign for Burma”.